Is there a difference between someone who sim trades for years and years and years and never goes live, and the person who sim trades for a couple months. Goes live, experiences a blowout or large drawdown. Realizes what he needs to work on. Goes back to sim trading to work on those problems and then goes live again?
For the person who is just simming away year after year I don't see the value in that. But I can see the value in someone who has experienced live market conditions and goes back to sim, taking it very seriously to figure out what they need to do.
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Losing money live does teach a trader something, but one can't keep losing the same amount of money testing out what they think might or might not work. Sim or no sim, there needs to be some sort of re-evaluation phase either simming, back-testing, or trading incredibly small sized trades to the point the losses don't really affect the account size. I would consider the latter to be simming to a certain extent before consistency or growth is attained considering the results of such small size is simulation for larger proportionate size.
Last edited by Itchymoku; May 22nd, 2015 at 08:48 AM.
Of course the studying is done first - medical school is the studying of basic science and general observation of some specialties, then if you become a surgeon you will go through a residency which DOES consist of studying behind the simulator - but there is only so much stuff you can do with that.
At some point you do have to make the leap. I think the best way to not fuck yourself is put a trailing stop on your own equity. So you kick yourself back to sim before you actually blow up. Or even just take time off if that seems to be more in order. I do think, though, if this is what you want to do, you shouldn't give up. And you shouldn't trade with negative emotional capital (I can't recall who coined that one but it's a good phrase), either. If anything, trading is about acceptance, more than it is about anything else.
Everyone has their own style as well as different situations in life. There are so many very deep emotions regarding people's relationships with money and everyone learns at their own pace.
While people give analogies to go against simulating, I can think of athletes that practice their swing, throw, lift, run thousands and thousands of times before becoming a professional. Trading with real money gives experience with one's attachment to the money, but doesn't allow the trader to develop their technique.
That's an extremely interesting concept that I thought about before. How many hands did that that asset, contract, etc. go through and how many people lost money for that 1 winner? How many commissions were paid? It's pretty crazy to me.
I've never blown up an account, i.e., taken account down to a cash balance that was untradeable, but I have had a few large losses that resulted in margin calls and/or being numb for several days, leading me to stop trading or just cash out my account in surrender.
The most memorable one was the last time I did this. At the time I was trading money I got from a credit card cash advance 0% interest for 12 months. I figured any idiot can make more than 0% in 12 months so I went for it. It took me a while to pay that back but at least I've gotten trading loss write-offs from on my taxes for years. It was primarily from selling naked options on 3x levered ETFs like FAS/FAZ during the height of the 2008/2009 financial crisis. I was collecting fat juicy premiums for a while and then the market went hard against me. The funny thing is that if I could have just held on for another day or two I would have made a sweet profit. I was margin called right before the bottom of the market on March 9th, 2009. I was trading way too much risk. Shortly after that I discovered Ninjatrader and BigMike's blog.
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